It’s common knowledge the California has a housing affordability issue that is just getting worse. As home prices have rebounded the last few years, rents have also risen dramatically. For most people, these increases have been greater than their increases in income, which is putting a serious squeeze on their household budget. It’s exasperating for people who make “a good income” to not be able to even rent a home in the Bay Area.
One idea that is coming back in vogue is rent control. This is where the government sets limits on how much the rent can be and/or for how much a landlord can increase rent from one year to the next. There was a recent bill proposing very strict statewide rent controls in California that was just withdrawn, it’s sponsors said it needed more work. Another smaller-scale rent control bill is working it’s way through the process that aims to limit rent increases to 5% per year plus the increase in the Consumer Price Index.
Proponents of rent control say that “something must be done” to rein in skyrocketing rents and to keep people from being evicted and eventually even winding up homeless. Opponents say that rent control will have the unintended consequence of making the rental situation worse. They say that rent control will lead to fewer available rentals because builders will build fewer rental units, new investors may not buy rentals and even some existing landlords may sell their units. Rent control supporters say these fears are overblown and point to cities like New York City that has had rent controls for decades. Most landlords are obviously against rent control and think they should be able to charge what the market will bear.
One thing I’m sure of is that we are going to hear a LOT more about rent control while the housing affordability problem exists in California.
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